ORACLE CONTRACT RISK OVERVIEW
Oracle’s sales strategy is focused on preserving and increasing the customers’ annual run rate over time. The sales teams are tasked with finding new revenue opportunities, and keeping commercial provisions off the table in agreements and ordering documents is an effective strategy to get the customer to spend more money in the future. In this Oracle report, we dive into the top Oracle contract ‘Gotchas’ used to lock in customers and continually drive cost increases in cloud-based deals. The Oracle risks and contract language that are addressed in this report include:
1. Cloud Transition Periods
We are seeing a significant trend of Oracle customers migrating from on-premise legacy applications such as Siebel, PeopleSoft, JD Edwards, and Oracle E-Business Suite to Oracle’s Fusion Cloud. There many ambiguous commercial term clauses in these cloud deals, specifically on the transition period terms, which dictate how much time the customer has to migrate off on-premise licenses to Fusion Cloud before they get shelved. This section details what customers should strive for regarding Extended Transition periods and shelved on-premises licenses.
2. Boilerplate Oracle Price Holds
Establishing competitive price hold language early in your Oracle relationship is key to controlling long-term costs. These terms set the baseline at which an organization will continue to expand with Oracle. If an organization neglects to negotiate competitive price hold language, costs can balloon quickly after the business adopts functionality and expands their usage.
3. Oracle Rebalancing & Termination in Favor Clauses
“Rebalancing” and “Termination in Favor” clauses are terms that provide customers with more control over their assets and the ability to re-allocate funds and usage to extract more value out of their deals. These terms are not standard in Oracle contracts, however customers can achieve them with a strong negotiation position.
Oracle contract terms and conditions are an integral part of their supplier strategy. Oracle will not concede to competitive terms without a strong negotiating position, because its success is tied to maintaining their standard contract language. To execute a successful Oracle deal, negotiators need to be wary of all Oracle contract risks and ways to protect their organization from future cost increases. For additional assistance on your Oracle purchase, review some of the other ClearEdge resources listed below to help plan your strategy and mitigate risk.